v3.26.1
Mortgages payable, net
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Mortgages payable, net
5. Mortgages payable, net

 

Mortgages payable, net consists of the following:

 

Description  Interest Rate  Weighted
Average
Interest
Rate for the
Six Months
Ended June 30, 2026		   Maturity
Date		  Amount
Due at
Maturity		   As of
June 30,
2026		   As of
December 31,
2025		 
                       
Revolving Credit Facility  SOFR + 3.30% (floor of 6.64%)   6.96%  July 2027  $30,844   $30,844   $30,844 
                           
Home2 Suites Tukwila Loan  AMERIBOR + 3.50% (floor of 3.75%)   7.27%  December 2026   15,478    15,588    15,738 
                           
Home2 Suites Salt Lake City Loan  AMERIBOR + 3.50% (floor of 3.75%)   7.27%  December 2026   10,064    10,136    10,233 
                           
Total mortgages payable      7.10%     $56,386    56,568    56,815 
                           
Less: Deferred financing costs                   (204)   (340)
                           
Total mortgages payable, net                  $56,364   $56,475 

 

SOFR as of June 30, 2026 and December 31, 2025 was 3.68% and 3.87%, respectively. AMERIBOR as of June 30, 2026 and December 31, 2025 was 3.82% and 3.77%, respectively.

 

Credit Facility

 

On July 31, 2024, the Company entered into a nonrecourse loan agreement with a financial institution providing for a credit facility (the “Credit Facility”) with a revolving feature of up to $40.0 million. At closing, the Company received an initial advance of $30.8 million under the Credit Facility and designated six of its wholly owned and consolidated limited-service hotels as collateral. The Credit Facility bears interest at SOFR plus 3.30%, subject to a 6.64% floor, with an initial scheduled maturity of July 31, 2027, subject to two, one-year extension options at the sole discretion of the lender, and provides for monthly interest-only payments during its initial term with monthly principal and interest payments pursuant to a 25-year amortization schedule thereafter during any lender approved extended term with the unpaid principal balance due at maturity. The Credit Facility previously provided for borrowings up to 65% of the loan-to-value ratio of properties designated as collateral and also requires the maintenance of certain financial covenants measured at the end of each calendar quarter, including a prescribed minimum DSCR and debt yield ratio (“DYR”), which if not met may also be achieved through principal paydowns on the outstanding balance.

 

As of June 30, 2026, the same six wholly owned and consolidated limited-service hotels remained pledged as collateral and no additional borrowings were available under the Credit Facility. 

 

On July 21, 2026, the Company and the lender entered into a loan modification agreement (the “Loan Modification Agreement”) to the Credit Facility. The Loan Modification Agreement removed the revolving feature under the Credit Facility and also revised the required minimum DSCR and DYR levels as measured for the calendar quarterly periods from June 30, 2026 and thereafter. In connection with the Loan Modification Agreement, the Company deposited $2.5 million into a cash collateral account held by the lender as additional security for the Credit Facility. Additionally, the Loan Modification Agreement requires the Company to either complete the sale of certain hotel properties pledged as collateral prior to September 30, 2026, or deposit an additional $5.2 million into the cash collateral account or provide a letter of credit to the lender in a like amount.

 

As of June 30, 2026, the Company did not meet the financial debt covenants under the Credit Facility but the lender has provided it with a waiver. 

 

The Company currently expects the lender to approve the first of the two one-year extension options available under the Credit Facility which would extend its maturity date from July 31, 2027 to July 31, 2028. If the lender does not approve the first one-year extension option, the Company would seek to refinance the Credit Facility on or before its initial maturity date. However, there can be no assurance that the lender will approve the first one-year extension option or the Company will be able to successfully refinance the Credit Facility on or before its initial maturity date.

Home2 Suites Mortgage Financings

 

On December 6, 2021, the Company entered into two cross-collateralized five-year non-recourse mortgage loan facilities (collectively, the “Home2 Suites Mortgage Financings”), both with the same financial institution. The Home2 Suites Mortgage Financings consist of (i) a facility providing up to $19.1 million (the “Home2 Suites – Tukwila Loan”) collateralized by the Company’s wholly owned and consolidated 139-room limited-service hotel located in Tukwila, Washington (the “Home2 Suites – Tukwila”) and (ii) a facility providing up to $12.5 million (the “Home2 Suites – Salt Lake City Loan”) collateralized by the Company’s wholly owned and consolidated 125-room limited-service hotel located in Salt Lake City, Utah (the “Home2 Suites – Salt Lake City”). The Home2 Suites Mortgage Financings bear interest of AMERIBOR plus 3.50%, with a floor of 3.75%. 

 

At closing, the Company received $16.2 million under the Home2 Suites – Tukwila Loan and the remaining unfunded amount of $2.9 million may be only be drawn subject to the satisfaction of certain conditions. The Home2 Suites – Tukwila Loan requires monthly payments of principal and interest of $0.1 million with the unpaid principal balance due at the maturity date of December 6, 2026. As of June 30, 2026, the outstanding principal balance of the Home2 Suites – Tukwila Loan was $15.6 million.

 

At closing, the Company received $10.4 million under the Home2 Suites – Salt Lake City Loan and the remaining unfunded amount of $2.0 million may only be drawn subject to satisfaction of certain conditions. The Home2 Suites – Salt Lake City Loan requires monthly payments of principal and interest of $0.1 million with the unpaid principal balance due at the maturity date of December 6, 2026. As of June 30, 2026, the outstanding principal balance of the Home2 Suites – Salt Lake City Loan was $10.1 million.

 

The Home2 Suites Mortgage Financings require the maintenance of certain financial covenants measured at the end of each calendar quarter, including a prescribed minimum DSCR and DYR, which if not met may also be achieved through principal paydowns on the outstanding balance. As of June 30, 2026, the Company was in compliance with the financial debt covenants with respect to the Home2 Suites Mortgage Financings. The Company currently expects to extend the maturity or refinance the Home2 Suites Mortgage Financings on or before their maturity dates; however, there can be no assurances that it will be successful in such endeavors.

 

Principal Maturities

 

The following table, based on the initial terms of the mortgages, sets forth their aggregate estimated contractual principal maturities, including balloon payments due at maturity, as of June 30, 2026:

 

   2026   2027   2028   2029   2030   Thereafter   Total 
Principal maturities  $25,724   $30,844   $    -   $     -   $     -   $     -   $56,568 
                                    
Less: Deferred financing costs                                 (204)
                                    
Total principal maturities, net                                $56,364 

 

Certain of the Company’s debt agreements also contain clauses providing for prepayment penalties.